My New Blog

The plan is called FHASecure and is  designed to prevent foreclosures among homeowners who fell behind because the rates went up on their adjustable-rate mortgages. People who refinance under the program will end up with fixed-rate mortgages. Details of the program are:

• FHASecure is geared toward the homeowner with and ARM who was paying on time until the rate was reset and the monthly payment went up. Lost of job or death in the family are not acceptable reasons.  
• There are loan-size limits that make these mortgages unworkable for high-cost markets such as most of King County.
• Borrowers will need at least 3 percent equity; the FHA will not help people who owe more than their houses are worth.

The maximum amounts vary from the most expensive in Los Angeles and Seattle at $362,790 to the less expensive market in Toledo, Ohio at $200,160. Though, under a bill the House passed Sept. 18, FHA loans could go as high as 125 percent of an area's median home price of 175 percent of the limit for loans purchased by Fannie Mae and Freddie Mac. That means in California and Washington, where the median home price is in the mid-$500,000, FHA insured mortgages will be well above $600,000.

FHA loans are pooled into federally guaranteed bonds issued by the Government National Mortgage Association (Ginnie Mae) and are considered as safe as Treasury securities. FHA does not have prepayment penalties, generous and flexible with borrowers with past credit clients but old-fashioned strick about documenting income and assets. FHA loans require as little as 3% downpayment and money can be received from non-profit organizations. Call me to find out more on down-payment assisted programs.   

Very few mortgage brokers deal with FHA due to high annual license fee and onerous standards. Congress is looking at possibly making it easier for mortgage brokers to work with FHA loans.